Sri Lanka army suffers heavy casualties in major battle

COLOMBO (AFP) - Tamil Tiger rebels killed at least 35 government troops and wounded another 200, halting a major offensive into their territory in northern Sri Lanka, military sources said.

Stiff resistance stalled the government's onslaught, which was backed by Israeli-built Kfir jets, after about six hours, high-ranking military sources said on Wednesday.

The bloodshed hit Sri Lanka's peace hopes a day after Norway, the key peace broker in the conflict, announced a deal between the two sides to resume negotiations in Switzerland later this month and end an eight-month talks impasse.

The military sources said the casualties occurred in the Muhamalai area of the Jaffna peninsula on Wednesday morning. Casualty figures for the rebel Liberation Tigers of Tamil Eelam (LTTE) group were not immediately available.

The warring parties blamed each other for the escalation.

Defence Ministry spokesman Prasad Samarasinghe said the operation was intended to neutralise a rebel build-up near the front line on the Jaffna peninsula, 400 kilometres (250 miles) north of Colombo.

"There were attempts to infiltrate our defence lines in three places and we took counter-measures," Samarasinghe told AFP. "They had been firing artillery at our positions in the past few days and last night we noticed a build-up."

The military said its ground offensive, supported by warplanes, was a "defensive act" as a result of Tamil Tiger attacks.

"We can't verify the reports but it is something the LTTE has informed us of," said Thorfinnur Omarsson, a spokesman for the Sri Lanka Monitoring Mission.

However, Omarsson said they also had information that the fighting had died down by mid-day. Both sides said the offensive was launched just before dawn.

"The offensive, shattering peace hopes, comes few hours after an official announcement by Norway that parties had agreed to meet in Switzerland from 28 to 29 October," the pro-rebel Tamilnet.com web site said.

The LTTE said the military was carrying out a three-pronged attack against rebel-held territory in the Jaffna peninsula.

"Intense clashes are going on," the LTTE said in a statement sent to Colombo from its political headquarters in the northern town of Kilinochchi earlier in the day.

Norway has been working to save a 2002 truce and end spiralling violence, which has claimed over 2,200 lives since December, according to an official tally.

Some 60,000 people have been killed overall in the three-decades-old conflict between minority Tamils seeking an independent homeland and government forces.

October's planned talks represent the latest attempt to quell the recent bloody upsurge in violence.

"It is crucial that the government and the LTTE now use this opportunity to cease hostilities," Erik Solheim, Norway's top peace broker, said.

Norway's statement on the talks was followed by an announcement by Japan, the island's main aid donor, that it will dispatch special envoy Yasushi Akashi on Sunday to try and boost peace efforts.

Akashi was scheduled to meet officials from both sides "with a view to enhancing this constructive effort and will also exchange views on the peace process and its future," the Japanese embassy said.

Sri Lanka's tiny stock market, which had gained on the back of possible peace talks, went into reverse Wednesday, falling about half-a-percentage-point.

The LTTE had warned it would reconsider its decision to go to Switzerland for talks if the military launched fresh attacks.

The government had said it only agreed to talks on the basis that it could defend itself from rebel attacks.